The Dunedin meat co-operative has set a precondition for the merger that companies commit all their production to the proposed mega company, despite one of the five candidate companies wanting to exclude beef.
Owen Poole, the Alliance Group chairman and the driving force behind the merger proposal, said discussions this week would try to break the potential impasse.
PPCS said in a letter to shareholders last week a condition of its support was the five companies commit all lamb, beef and venison slaughter and processing activities to the entity, which would handle 80% of the nation's meat procurement, processing and marketing.
Mr Poole said it had been widely for known for some weeks among the five companies that one unnamed company did not want to commit all its beef business.
"PPCS knew at least one of the parties wasn't going to provide all their beef,'' he said.
Mr Poole said PPCS's stance threatened the future of the proposal.
"If that remains a precondition, it won't go ahead.''
He did not see the exclusion by one company of their beef kill as a problem because the bulk of the $400 million in industry savings Alliance identified from a merger was from sheep meat.
"There are advantages for beef and venison, but by far the bulk of the gains relate to sheep meat.''
Mr Poole said the industry needed to decide if it would allow beef to derail the project.
"It is not a question for me,'' he said when asked.
But, PPCS chairman Eoin Garden said his company had not changed its position since the concept was first mooted - other participants in the proposed merger had.
"We haven't changed our minds or done anything different.''
He was concerned the industry would be fragmented by candidate companies being able to exclude some species.
"To us there would be a fragmentation of the industry if some species were left out.
"The goal of this rationalisation of the industry is to bring the bulk of the industry into a large entity, and it makes no sense to fragment part of it.''
PPCS had clients that bought sheepmeat, venison and beef and it was important that they were able to continue supplying all three species.
Mr Garden agreed this week would be critical in meeting Mr Poole's time-line, but said discussions were continuing.
"For the good of the industry these issues have got to be resolved.''
Discussions this week would try to find a solution as other candidate companies needed certainty.
"They need to know: Will PPCS and Alliance come together as an entity before they enter the process?
"At the end of the day they need to know there will be someone at the end of it to purchase their assets.''
The proposal is for a PPCS and Alliance merger to act as the vehicle to acquire and merge with the other three companies, believed to be Affco, ANZCO and Bernard Matthews.
A quick resolution was also desirable to keep the proposed merger on track for completion this calendar year.
To achieve that, Mr Poole said, company valuations, business and strategic plans and financial modelling all needed to be completed in tandem so a comprehensive package could be prepared for the Commerce Commission to consider in June.
Initial assessments on the proposed merger were based on publicly-available information, but companies were at a point where they needed to commit to the proposal and release finer details.
"We have one cat in the box [Alliance Group] and it is enticing others to join it.''
PPCS and three other candidate companies were considering reports on the proposal.
